United States

The S&P 500 advanced 0.7%, supported by gains across 80% of its constituents, with technology and industrials among the top-performing sectors. The Nasdaq 100 rose 0.6%, while the Dow Jones Industrial Average climbed 1%. Small-cap stocks in the Russell 2000 led the charge, soaring 1.7%, as traders bet that a protectionist agenda would benefit domestic-focused companies.

Trump’s first day back in the White House included announcements of a significant push into artificial intelligence. Key players such as SoftBank Group, OpenAI, and Oracle are expected to lead the initiative, boosting sentiment for tech-heavy sectors. An AI-focused ETF surged to its highest level in three years. Meanwhile, shares in space exploration companies rallied on expectations of deregulation, while electric vehicle makers lagged amid policy uncertainties.

The 10-year Treasury yield fell five basis points to 4.58%, reflecting demand for safe-haven assets. The US dollar wavered, finishing the session largely unchanged, as mixed signals on trade policy left currency markets cautious.

Europe

European equities mirrored US gains, with the Stoxx Europe 600 rising 0.4%. Optimism stemmed from relief that Trump refrained from announcing immediate tariffs on the region, although concerns linger over future trade policies. Luxury goods makers such as LVMH and Hermès contributed to the rally, benefiting from resilient demand and easing fears of trade disruptions. Automakers, however, faced headwinds, as worries over tariffs on Mexico and Canada spilled into sentiment around global supply chains. Daimler and BMW posted modest declines, while Volkswagen held steady.

Energy stocks faced volatility as the US president’s freeze on new offshore wind projects raised concerns about renewable energy investments. Denmark’s Ørsted fell 18% after reporting higher costs and delays, highlighting broader industry challenges. Utilities with significant exposure to clean energy, including Germany’s RWE and Spain’s Iberdrola, also posted losses.

Investors showed increased interest in European equities, supported by a weaker euro that makes exports more competitive. A Bank of America survey indicated a shift toward European markets, with traders betting that the region could benefit from Trump’s relatively restrained approach to EU trade policies. Still, sectors with high exposure to trade policy, such as miners and industrials, saw muted performances.

Attention is now turning to upcoming earnings reports, which are expected to provide further clarity on how European companies are navigating the global economic environment. Forward guidance will be closely scrutinised to assess whether recent optimism can translate into sustained growth for the region.

The performance gap between US and European stocks has narrowed this month, as some analysts suggest that valuations in Europe offer a more attractive entry point compared to their US counterparts. The rotation into non-US markets continues to be a theme, with investors looking for opportunities in undervalued sectors across the continent.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities

Commodities delivered a mixed performance. West Texas Intermediate crude fell 2.6% to US$75.89 a barrel, driven by demand concerns and the strengthening US dollar. Gold prices rose 1.3% to US$2,742.47 an ounce, supported by safe-haven buying amid geopolitical uncertainty. Iron ore advanced 0.9% to US$104.80 per tonne, buoyed by robust demand from Chinese steelmakers. In cryptocurrencies, Bitcoin surged 4.5% to US$107,099.36, and Ether climbed 1.5% to US$3,330.98, as sentiment in the digital asset market remained positive. The Australian dollar traded at US62.66¢, down 0.1%, reflecting mixed global risk sentiment.

Economic Data:

• New Zealand: Fourth-quarter inflation data expected, with economists forecasting a 0.6% quarterly rise, bringing annual CPI to 2.3%.
• Australia: Resource sector updates, including quarterly reports from Woodside Energy, Paladin Energy, and Iluka Resources.
• United States:
  • Conference Board Leading Index (Wednesday)
  • Jobless claims (Thursday)
  • University of Michigan consumer sentiment, existing home sales, and S&P Global Manufacturing & Services PMI (Friday)
• Eurozone:
  • Consumer confidence figures (Thursday)
  • HCOB Manufacturing & Services PMI (Friday)
• Japan: Bank of Japan policy meeting and CPI data (Friday)